Home Equity financing

A Home Equity mortgage, also known as a "second mortgage" or "Home Equity Line of Credit (HELOC)," is a financial product that allows homeowners to borrow money against the equity they have built up in their homes. Home equity is the difference between the current market value of the home and the outstanding balance on the mortgage(s) secured by the property.

In Canada, when extracting equity from a home, the guidelines are that we must keep a minimum of 20% equity in the property. So, any first and second mortgage (or first mortgage and HELOC) combined, can not outweigh more then 80% of the homes value.

Home equity loans are popular because they can provide homeowners with access to funds for various purposes, and the interest rates are often lower compared to other types of loans, as they are secured by the property.

This can be a good alternative to tapping into equity without going through a full refinance which could result in penalties of any current mortgage in place and could affect the applicants existing mortgage rate (this is more of a concern when the existing rate is far lower than market rates).